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How do actors coordinate for value creation? A signaling and screening perspective on resource integration

How do actors coordinate for value creation? A signaling and screening perspective on resource... Purpose – Although service research typically asserts that institutions coordinate actors’ value creation processes, institutions and resources are not necessarily transparent, aligned, or pre-existing. This paper aims to develop a more granular perspective on how actors coordinate for value. Design/methodology/approach – Drawing on the established concepts of signaling and screening theory, this paper adopts a service marketing perspective to explore how independent heterogeneous actors coordinate for value creation at the individual level. Illustrative cases of corporate startup collaborations are presented in support of the proposed conceptual framework. Findings – Actors share and acquire information through signaling and screening activities in a coordinative dialogue with other actors. These resource integration activities (for resource creation and matching) affect actors’ valuations and future actions. Originality/value – The one-sided explanations of coordination in the existing literature reflect the dominance of the institutional theory. By contrast, the proposed agency-oriented perspective based on the integration of signaling and screening functions offers a more granular conceptualization of the resource integration process. As well as capturing how actors use coordinating dialogue to match resources and institutions, this account also shows that matching is a core element of resource integration rather than an antecedent. The findings indicate paths for future research that focus on the actor. Keywords Resource integration, Coordination, Signaling, Screening, Matching, Resource asymmetry, Value creation Paper type Conceptual paper access to resources like competencies, relationships, Introduction institutions, past experience or information about one another According to the service marketing literature, the joint activities is generally unequal. This complex condition of resource or interactions that emerge during any service exchange asymmetry, which emerges in any existing or potential exchange represent a source of value for the actors involved (Vargo and relationship, leads actors to intentionally or unintentionally Lusch, 2017). This perspective conceptualizes interactions as a misuse, misalign or fail to use available resources (Cabiddu process of integrating resources, embedded within the broader et al.,2019; Laud et al.,2019; Plé and Caceres, 2010; Prior and domain of interactive value formation (Caridà et al., 2019; Marcos-Cuevas, 2016). For that reason, there is a need for an Echeverri and Skålén, 2021). Existing research characterizes institutions as rules of the game that enable or constrain actors’ resource integration activities and so influence how actors co- © Sebastian Dehling, Bo Edvardsson and Bård Tronvoll. Published by create value (Vargo and Lusch, 2016). However, institutions Emerald Publishing Limited. This article is published under the Creative are not deterministic; nor are they necessarily transparent, fully Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, shared, or pre-existing (Karpen and Kleinaltenkamp, 2018; distribute, translate and create derivative works of this article (for both Lusch and Watts, 2018; Vargo and Lusch, 2016), and actors’ commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode The current issue and full text archive of this journal is available on Emerald Received 22 February 2020 Insight at: https://www.emerald.com/insight/0887-6045.htm Revised 13 September 2020 3 March 2021 1 July 2021 8 October 2021 Journal of Services Marketing 8 December 2021 36/9 (2022) 18–26 16 February 2022 Emerald Publishing Limited [ISSN 0887-6045] [DOI 10.1108/JSM-02-2020-0068] Accepted 17 February 2022 18 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 actor-centric explanation of how actors coordinate to facilitate interactive value formation processes and exchange services value co-creation rather than value co-destruction within the through resource integration (Caridà et al., 2019; Vargo and process of interactive value formation (Echeverri and Skålén, Lusch, 2016). However, while the existing literature recognizes 2021; Edvardsson et al.,2014; Karpen and Kleinaltenkamp, the asymmetric nature of service exchange between 2018). In the absence of a more granular view of resource heterogeneous actors (Edvardsson et al.,2011), it fails to take integration as an embedded core process of interactive value account of how the coordination of existing institutional arrangements in complex or problematic situations or the formation, the current literature fails to explain how actors availability of complementary resources is at best minimal and coordinate for value creation. usually temporary (Tadajewski and Jones, 2021; Vargo and The goal of resource integration is to create and match Lusch, 2017). resources (actors, institutions, processes and practices) for To address this gap, we look beyond a simple view of optimal co-creation of value (Gummesson and Mele, 2010). resource asymmetry as a matter of differential quantitative To facilitate such outcomes, actors must manage dependencies endowment (e.g. more financial resources) and instead define it between activities and resources (actors, institutions) through as a lack of equivalence between actors’ access, interpretation/ information sharing. Building on this idea, the present paper valuation and application of resources. This complex condition uses the well-established concepts of signaling and screening and associated dependencies among heterogeneous actors is (e.g. in information economics) to explain actors’ coordinative seen to emerge before, during and after a cycle of interaction behaviors in addressing aspects of resource asymmetry such as and valuation (i.e. resource integration) As in Akaka, Vargo information asymmetry (Hult, 2011). Signaling refers to and Lusch’s (2012) discussion of resource adoption, resource intentional actions (sometimes with unintended consequences) access, valuation and use are understood here as ongoing to disclose qualities (e.g. competencies) or intentions (e.g. processes of interactive value formation. As indicated earlier, preference for rule-following) that may not be recognizable, coordinating for value creation is part of the wider domain of aligned or realized without some degree of effort (Connelly interactive value formation, and possible outcomes include et al., 2011; Spence, 1974). Screening, on the other hand, refers value co-creation and value co-destruction (Echeverri and to intentional actions to identify and acquire resources such as Skålén, 2021). Here, coordination refers to the (inter-)actions information (Bergh et al., 2020; Spence, 1974). that contribute to the achievement of intended value outcomes In demonstrating the relevance of an actor-driven during interactive value formation. explanation of coordinating for value creation, the paper extends the conceptualization of resource integration to Principles of resource asymmetry and challenges for incorporate signaling and screening as naturally embedded resource integration functions and coordinative competences. We also show how In their elaboration of service-dominant (S-D) logic, Lusch and signaling and screening to address resource asymmetry by Vargo (2014) contend that anything that actors draw on or use creating and matching resources shapes actors’ valuations and through interaction can become a resource – something subsequent levels of resistance and interaction. To intended and expected to enable value creation. Understanding contextualize this extended framework, the paper describes resources as states of becoming rather than as fixed entities illustrative cases of collaborative innovation that required foregrounds the subjectivity of individual actors’ valuations and comprehensive coordinative dialogue to address resource lends relevance to the view that resources are integrated asymmetries among the involved actors. The paper responds to through interaction and become with other resources in a given calls for more research on asymmetric relationships context (Chandler and Vargo, 2011; Lusch and Vargo, 2014). (Tadajewski and Jones, 2021), coordination strategies (Karpen It follows that resources have potential value as context- and Kleinaltenkamp, 2018) and the nature of value creation in dependent abstractions that reflect individual actors’ sense of service marketing (Brodie et al.,2019; Pohlmann and “resourceness” or utility in context (Koskela-Huotari and Kaartemo, 2017; Wilden and Gudergan, 2017). Vargo, 2016; Lusch and Vargo, 2014). After describing the complex conditions governing how It becomes clear, then, that the unique subjective actors integrate resources, we identify the gaps in existing interpretation of constellations of resources or relations (actors, conceptualizations of resource integration. Signaling and institutions and other resources) in a particular time- and place- screening are introduced as a means of explaining the dependent situation contributes to resource asymmetry coordinative activities and interactions associated with resource between actors. Additionally, the empirical fact of non- integration. The paper advances a comprehensive conceptual transparent, misaligned or non-existing resources (such as framework supported by illustrative cases of innovation institutions or competencies) means that some effort may be collaboration and concludes by discussing the paper’smain required to recognize the potential resourceness within a contributions and limitations, along with directions for future particular context. Actors may also perform different roles in research. different situations (Chandler and Vargo, 2011), and public, private and market-facing sources of value may overlap, adding Coordinating for value creation to the complexity of deciding who should play which role The empirical fact of unequal distribution of resources (such as (Vargo and Lusch, 2011). As actors’ embeddedness in a knowledge, skills, land and capital) begets the economic truth particular exchange context also mediates resource access, that actors specialize and enter profitable exchange interpretation and integration (Laud et al.,2015), altered relationships to better themselves. From a service marketing access or availability affects subjective valuation and interaction perspective, this means that heterogeneous actors engage in as elements of the resource integration cycle and sources of 19 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 Figure 1 Principles of resource asymmetry Resource asymmetry Elements affecting and Interdependence of affected by resource elements asymmetry Valuation: Non-equivalent access Definition: Actors’ non-equivalent to resources affects actors’ access to and integration of subjective valuations and vice resources. versa. Classification: Complexity and Interaction: Non-equivalent access interdependence of resources to resources affects actors’ emerging before, during, and after interaction styles, skills, and roles any cycle of interaction and valuation in practice. (i.e., resource integration) among Outcomes: Expected or emergent, heterogeneous actors. intended or unintended, outcomes Consequences: Resource asymmetry contribute to actors’ non-equivalent affects actors’ valuation of resources access to resources. As newly and is affected by ongoing generated resources (i.e., interactions and outcomes that shape information), outcomes change or the state of those resources. maintain actors’ valuations and interactions. resource asymmetry, presenting challenges for coordination. A coordination, as it informs the subsequent valuations and third source of resource asymmetry is the outcomes generated by actions of other engaged actors. In any event, information is interactions and valuations, which in turn become new clearly central to resource integration as throughput, input and resources and influence resource asymmetry. Figure 1 provides output of the value processes that underpin service (Löbler, a conceptual overview of resource asymmetry as a permanently 2018; Lusch et al., 2010; Vargo and Lusch, 2004). changing condition of resource integration. We argue that effective coordination of value formation Given that actors make discriminatory valuations based on requires actors to fully understand the available resources and scarce resources and act as part of a service ecosystem, any the intentions of their collaborators. Vargo and Lusch’s (2014, interaction will generate some level of information or sensory 2017) parallel argument – that fully coordinated or managerial experience; even non-interaction provides information. actions are a special case of resource integration, and that the Resource integration, including mis-integration and non- general act of integrating resources is entrepreneurial – has not integration, generates new resources and influences resource been further addressed in the literature. The prevailing asymmetry by altering or maintaining relations between perspective contends that, as collective cultural beliefs, social resources as seen by individual actors. Given the axiomatic norms and practices, institutions provide a frame of reference condition of time passing, actors can evaluate qualitative and that constrains the range of actions available to different groups quantitative asymmetries by comparing perceived resource of actors (Edvardsson et al.,2014; Vargo and Lusch, 2016). relations before and after an interaction, confirming that Although a more recent account grounded in institutional work resource integration generates ongoing information that seems to acknowledge the agency element of coordination contributes to resource asymmetry, enabling or inhibiting (Koskela-Huotari et al., 2016); Vargo et al., 2015), it focuses on interactive value formation. the process of institutionalization rather than explaining how In similar vein, Peters (2016) advanced the idea of two paths self-interested actors coordinate for value creation. of resource integration that yield either summative outcomes Interestingly, recent conceptualizations of resource (e.g. exchange of information) or emergent outcomes (e.g. integration refer to a preliminary matching phase as a dialogue and learning). Complementing this line of argument, coordinating activity that ensures the efficient and effective Siltaloppi et al. (2016) proposed that novel resources are more integration of resources in pursuit of value (Caridà et al.,2019). likely to emerge from the interpretive flexibility afforded by Matching is understood as a dialogical process that aligns complex institutions that are overlapping, not fully transparent, resources, practices and actors (Caridà et al., 2019; misaligned or not yet existing, which we consider part of the Gummesson and Mele, 2010). While we acknowledge the more general concept of resource asymmetry. Regarding relevance of this process of alignment and resource fitting, it emergent outcomes, Hughes et al. (2018) linked resource remains unclear how matching occurs, but we accept that integration to learning, arguing that actors enhance their interactive value formation is a function of matching knowledge and skills through experience, which affects how competence (Echeverri and Skålén, 2021). they integrate resources in subsequent interactions. Equally, Caridà et al. (2019) argued that matching is simply a prelude any outcome may create resource deficits that lead to misuse of to the main process of resource integration: acting on resources, resources and ultimately to a lack of trust (Vafeas et al., 2016) followed by valuing as the interpretation of resources and or misaligned practices (Echeverri and Skålén, 2011). outcomes. In this three-phase account of resource integration, Differing interpretations or access to information can also Caridà et al. (2019) characterize matching as interaction lead to value co-destruction as an aspect of ineffective or inefficient value formation (Echeverri and Skålén, 2021; Plé through dialogue in practice, mediated by social context and coordinated by institutional arrangements. While we fully agree and Caceres, 2010). Regardless of whether the new perceived that matching is a dialogical process, we contend that a more state of relations between resources is an intended outcome or an unintended emergent consequence, this remains an issue of granular description of how matching actually occurs is needed, 20 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 in line with Gummesson and Mele (2010) and Alderson Both of these concepts address the effort or cost of (1957). generating, sharing or acquiring information (Gambetta and First, as matching by definition depends on interaction, it is Bacharach, 2001; Spence, 1973; Zahavi, 1975). Costly or not, conceptually inseparable from resourcing. Second, as matching every observable action or non-action embedded in a multi- involves identifying and aligning collaborating resource- actor social context – in this case, a service ecosystem – can be interpreted as a signal or remain a simple sign. In general, costly integrating actors, it is inseparable from valuing (the signals are not imitable without some effort and have more interpretation or judgment of resources). In general, valuing persuasive power in differentiating actors’ valuations of depends on actors’ competencies and past experiences, as well resources (Riley, 2001; Spence, 1974). Connelly et al. (2011) as institutions and other resources, which shows that argued that less trustworthy information about another and the conceptually valuing is based on resource integration as is effort required to distinguish between signal and noise makes matching. In short, Caridà et al.’s (2019) conceptual separation actors reluctant to interact (Perkins and Hendry, 2005). of resource integration into separate phases is not theoretically Screening and signaling are multifaceted competencies that consistent but is conflated with an empirical description. For actors develop over time for interpreting and using signals. In a example, in a coffee shop, matching occurs when a customer dialogue to facilitate value creation, one sequence of intentional looks at the blackboard and asks the barista for suggestions; actions may prove more useful, and knowledgeable and skilled resourcing is the act of ordering and paying; and valuing is the (i.e. competent) actors facilitate efficient and effective dialogue decision to buy and the customer’s judgment of the coffee’s to coordinate value formation in complex conditions of value as a subjective matter of taste. Against this, resource resource asymmetry. In such a dialogue, signaling and integration as a theoretical concept is defined and positioned screening enables competent actors to detect relevant signals here as the process underlying all three phases of interaction and to respond or countersignal, so providing feedback that and evaluation. confirms or improves the interpretation (Connelly et al., 2011) In summary, we conceive of resource asymmetry as a or confuses it (Bergh et al.,2019). In short, signaling and complex information problem that renders the existing screening shape coordinative dialogue through the feedback institutional view insufficient because it lacks an actor- or loop of observing and evaluating the results of one’s own and agency-driven element. To complement existing frameworks others’ actions and responding through further action or non- and to properly ground the concept of matching, it seems action. necessary to accommodate actors’ competencies and activities Through interpretation and comparison, actors try to match for coordinating value formation. Following suggestions for newly created or disclosed resources with existing resources conceptual development in marketing contexts (MacInnis, (e.g. knowledge, institutions) by determining whether certain 2011), we look beyond the institutional theory-driven service actions facilitate value, comply with institutions, explicate the marketing perspective to the concepts of signaling and implicit and enhance orientation and interpretation. Successful screening; in the substantive domain of service marketing matching drives the alignment or configuration of resources (Jaakkola, 2020), these concepts offer a means of explaining within an exchange context (Caridà et al.,2019; Gummesson individual actors’ responses to the challenges of coordination. and Mele, 2010; Nenonen and Storbacka, 2010). In furthering mutual expectations or understanding, this can be understood Signaling and screening as coordinative function and as a competence and therefore also as a resource. Similarly, competence actors learn which actions distract others from specific The present study is grounded in the concepts of signaling and resources or generate noise. These cheap actions screening, which have proved useful in a range of disciplines, accompanying the primary signal are used to disturb that signal including economics, biology and sociology. Hult (2011) (Branzei et al., 2004), making a resource visible only to a argued that these concepts can contribute to (service) particular group of actors that are believed to recognize it marketing theory because they help to explain how actors cope despite the accompanying noise. with information asymmetry in exchange relationships Interestingly, as a function of any deliberate action of this (Akerlof, 1970; Bergh et al.,2019; Connelly et al.,2011). The kind, signaling and screening can also be understood as a meta- concept of resource asymmetry as defined here is more competence across a range of scenarios and roles. While inclusive than information asymmetry. In our view, research has focused mainly on how signaling and screening information extends beyond market information to the issue of improve market exchanges by reducing information problems, subjective differences; as the core input and output of resource actors may also resort to opportunistic behavior to create value integration, information flows through all the processes of value for themselves while neglecting potential adverse effects for formation (Vargo and Lusch, 2004). other actors or the natural environment (Edvardsson et al., Spence (1973) defined signaling as one means of transferring 2011; Plé, 2016; Williamson, 1985). On a more positive note, information to other actors by disclosing (intentionally or signaling and screening inform trial-and-error learning about unintentionally) quality characteristics or action intentions that new resources, new resource combinations and their use in might not be identifiable in the absence of prior interaction interactive value formation. This is closer to what has been (Connelly et al.,2011). Screening refers to activities designed conceptualized as institutional work (Siltaloppi et al., 2016). to identify qualities and intentions that are not knowable Acknowledging the multifaceted subjectivity of resource without some effort (Spence, 1974; Stiglitz, 1975). To that asymmetry, our theoretical framework conceptualizes signaling end, actors emit a range of signals and allow others to self-select and screening as embedded functions of resource integration. If where and how to respond (Arrow, 1986). used intentionally and with due effort, this competence 21 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 contributes to coordination for value by facilitating resource Figure 3 Matching – function of signaling/screening and means for alignment and matching. Building on the theoretical coordination underpinnings above, we can now elaborate the extended framework before turning to some practical illustrations of its application in practice. Conceptual framework Extended conceptual framework In this first step of our extended conceptual framework (Figure 2), resource integration is envisaged as a cycle of valuation and interaction that affects and is affected by resource asymmetry – actors’ non-equivalent access to resources. By incorporating resource asymmetry in our account of resource integration, we aim to show how each cycle creates resources by emitting information that changes or maintains resource asymmetry for the actors involved. As well as limiting or enabling these actors’ valuations and integration of resources, resource asymmetry contributes to the evolutionary nature of resource integration. By constantly creating “new” resources (i.e. emitting information), resource integration is an inherently coordinative process – not just in the sense that the involved actors combine resources but because the ongoing emergence of information has consequences for future cycles of resource integration. This coordinative function persists even in the absence of intentional coordination practices. Unlike other conceptualizations, the first step of our framework excludes matching as an antecedent of the resource Actors signal through interactions linked to certain institutions integration cycle or as a sequence or separate element. In (i.e. meanings), and they screen by comparing, linking or Figure 3, the second step of the framework extends our account aligning emitted information with existing resources. In sharing of how actors coordinate for value outcomes. and acquiring resources (i.e. information) with or from other At the center of Figure 3, matching is the outcome of a goal- actors, this dialogue generates matches. The intentional use of oriented approach to coordinating for value based on the interactions to signal and screen generates matches and signaling and screening functions of resource integration. coordinates action in pursuit of desired value outcomes. Through ongoing interactions, actors can develop valuable Figure 2 Interdependence of resource asymmetry and resource resource combinations to produce complementary matches that integration more effectively facilitate positive value outcomes. The cycle of trial, error and learning continues until a match emerges. As signaling and screening are enacted in resource integration across multiple institutionalized practices, matching becomes a versatile competence and mediating resource. Existing institutional perspectives typically neglect the agentic element and lack the necessary granularity to explain how actors coordinate for value amid the uncertainty of resource asymmetry. Our framework bridges this gap by incorporating signaling and screening as strategic tools and by positioning coordination as a competence. To contextualize this extended framework, the illustrative cases in the next section draw on the authors’ professional experiences of resource asymmetry in dynamic innovation contexts. Coordinating for value in corporate-startup collaborations According to our theoretical framework, resource asymmetry is an aggregate condition of resource integration. Corporates and startups typically differ in their access to resources, and these differences clearly shape the relationship and interaction between such actors. For example, quantitative differences in financial resources prompt startups to seek corporate venture capital to finance growth or to pursue commercial 22 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 collaborations that facilitate market entry. Similarly, qualitative also signals their power to scale and to dominate their differences in credibility, trust or mutual understanding may competitors. affect relationships with other relevant actors. Because startups In practice, large incumbents are increasingly interested in often have business-to-consumer (B2C) access to user groups collaborating with startups as part of an open innovation strategy. To that end, corporates may adapt their habitual legal they identify with, they can develop innovative offerings to address personal pain points and evolving service demands. By provisions by moving toward a venture client agreement that contrast, large incumbents that provide services to the same allows startups to sell services and run paid pilot projects without the qualitative burden borne by established suppliers. group may encounter complaints because the relationship is taken for granted as the service become a commodity. This adaptation of legal agreements is a costly signal In any collaboration, actors starting from different positions demonstrating the corporate’s commitment and flexibility, are likely to perceive their use of resources as natural and to which would not otherwise be apparent. By contrast, as assume that this is obvious to others. For that reason, despite startups have no legitimate achievements to signal competence, some complementarity of resources, asymmetric collaborations the additional uncertainty associated with their innovative can prove difficult to coordinate in pursuing desired outcomes. technologies and business models makes it harder for While complementary knowledge underpins the shared value incumbents to see how value can be realized through of collaborating for innovation, differing market positions collaboration. For that reason, incumbents may decide to undermine shared understanding of each other’s pain points screen startups through low-cost, low-intensity pilot projects and how best to achieve their common goal. For instance, a before committing fully to a commercial agreement. Because of resource asymmetry, large incumbents may pay startup may need to make immediate short-term gains from collaboration because inefficient use of available resources for pilot projects as a signal of fairness, which would not could lead to financial difficulties or bankruptcy. By contrast, otherwise be observable given the corporation’s greater power and independence. Indeed, incumbents may maintain a an incumbent may view the startup as one resource among many and sees no need for urgent action. portfolio of engagement vehicles for startup collaborations, This lack of mutual understanding may fail them both. signaling different requirements and outcomes that range from Diverging perceptions and lack of knowledge of each other’s quarterly events and hackathons to incubation or acceleration programs, pilot projects, venture client agreements and qualities and intentions can create uncertainty that hinders initiation of collaboration, cuts it short or renders it ineffective corporate venture capital investments. By sending comparable or inefficient. This significant asymmetry of resources differs signals, startups can select an entry point to collaboration that sharply from a strategic alliance with peers or a supplier reflects their abilities and needs and potentially enhances innovation project. The interaction dynamic is also different resource integration and value formation. when collaborating with lead users as suppliers of ideas rather Screening and signaling behaviors change according to how than with commercial partners working toward strategic goals. potential collaborators approach and interpret each other. A startup may simply wish to use a big brand to enhance its Regardless of any partial complementarity, a significant disparity in access to resources is likely to increase uncertainty reputation while having other plans for commercial about means and ends. engagement. Equally, a corporate may be more interested in In these circumstances, signaling and screening serve as learning about new markets than investing resources that would strategic tools for increasing the potential of collaboration to enable the startup to become a competitor. The lifecycles and manifest and eventually facilitate value. Adopting a targeted primary contacts of both actors may also influence the signaling approach, a signaling and screening dialogue can enhance and screening dialogue. For example, startups run by industry- mutual understanding through intentional actions to learn savvy former consultants rather than young entrepreneurial about characteristics and needs. In practice, startups and large renegades signal and screen differently when interacting with market incumbents use signaling and screening to explore their large incumbents, and a large corporation with multiple shared resource asymmetry and how combining and integrating departments and sponsors may pursue a wide range of open resources as collaborators might facilitate value for both. The innovation strategies. feedback loop from these signaling and screening activities Signaling and screening can also reduce or overcome generates a minimum viable combination of resources that asymmetry through substitution or opportunistic exploitation of uncertainty. To reduce uncertainty in a given exchange supports initial cooperation and may or may not develop over time into sustained value creation. context, a startup may seek to initiate a collaboration with a This corporate-startup context is exemplary because the large corporation by offering a low-effort test of its resourceness success of any such collaboration can be explained to a (e.g. API access) to signal its quality. Similarly, a startup may considerable extent in terms of signaling and screening overcome uncertainty about its lack of previous achievement by activities. Through open innovation, large corporations can building its offering around a next-generation technology or build on startup success in new markets by screening those engage in further proof-of-concept testing to signal its potential markets to learn about value creation in a new context; for value formation and future collaborations. To secure more simultaneously, they signal their innovativeness to investors, funding from a corporate collaborator, a startup may use achieved through short-term collaboration. Similarly, startups signaling to increase resource asymmetry after screening the can screen acceptance of their new service by using corporate limits of this strategy with the focal partner. The startup may distribution channels to achieve scale and to gather feedback signal a need for further funding by inventing development beyond their own niche. This engagement with a major brand problems and delaying pilot projects. 23 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 On the other hand, startups may reverse to secure better The existing emphasis on institutions also neglects the outside investors. If an existing collaboration is proving Austrian school’s insights into the entrepreneur’s use of problematic, the larger organization may seek to maintain a judgment to identify new combinations of resources in the face positive narrative to attract other startups, and those positive of uncertainty. The lively discussion of uncertainty and value messages can be leveraged to increase resource asymmetry (i.e. creation in the entrepreneurship literature also seem worth innovation theater). Large organizations can also use signaling exploring; to the extent that effectuation and judgment inform to hinder the development of certain relationships by increasing the process of resource integration, the entrepreneurial perspective has much to offer. resource asymmetry – e.g. requiring signup to complex The present study also confirms the relevance of concepts agreements before engagement sends a signal to startups that like uncertainty and resource asymmetry for future research. lack the necessary competence or commitment. All of these The new institutional economics seems a valuable addition to instances confirm the role of signaling and screening as a mid-range marketing theory regarding the effects of uncertainty foundational strategic tool for coordinating value formation by on exchange relationships. Agency theory transaction cost matching resources and aligning mutual expectations. analysis also contribute to explanations of actor coordination, and property rights theory completes this set by lending further Conclusion depth to discussions of resource use and power. The present analysis offers a more granular account of how In general, the more granular approach to uncertainty in the actors coordinate for value. In particular, the proposed heterodox economics literature promises a better explanation framework highlights the relevance of an actor- and action- of associated behaviors than the bounded rationality of the S-D driven explanation of coordinating by articulating the role of logic. The existing value co-creation narrative also neglects the resource asymmetry in resource integration, which is neglected role of individual local and tacit knowledge and the explicit in the existing literature. On this view, resource integration is collective knowledge shared by multiple actors. Here, the issues grounded in a closed cycle of valuation and interaction that of power and access to knowledge are closely entangled with plays a coordinative role by continuously generating new perceived uncertainty and dominant institutions, indicating a resources (notably information). possible direction for exploring decisions and behaviors during To complement the existing institutional perspective on the resource integration. coordination of value formation, we adapt the concept of The concepts of signaling and screening offer a practical matching advanced by Caridà et al. (2019) and Gummesson starting point for empirical investigations of interactive value and Mele (2010) to extend existing conceptualizations of formation and coordination challenges in various contexts. resource integration. In particular, we conceptualize matching Although rooted in economics and biology, their profoundly as a coordinative activity that informs the signaling and social dimension may well illuminate the coordination of action screening dialogue. The framework describes how actors deal in a multi-actor environment and the occurrence of actions that with resource asymmetry, ranging from simple information seem non-rational. In the age of social media, where resource deficits to a complex variance in rule following, through deployment is increasingly complicated by short attention span intentional actions that create, share or acquire information and and fake news, it seems important to explore how dialogue explains how actors reduce, overcome or exploit resource through signaling and screening facilitates matching of actors asymmetry by matching resources to align and shape valuations, and resources. For example, to facilitate resource integration, levels of resistance and modes of interaction. This actor-centric actors may perform social roles at odds with their identity. account restores agency and intention to the coordination of Further research on signaling and screening may also value processes, which is lacking in the existing socio-structural enhance our understanding of value co-destruction, frameworks of S-D logic (Vargo and Lusch, 2016). asymmetric value outcomes and the decoupling of institutions and actions. Finally, an understanding of signaling and Future research – consolidation with seminal economic screening may help to explain the emergence, stability and theories decline of social institutions and service innovation. Some Following MacInnis (2011), our integrative conceptual combination of signaling and social capital theory may also approach invites new questions that will further advance yield insights into the motives of individual actors in existing understanding of resource integration and value coordinating resource integration. formation narratives in marketing contexts. Drawing on this paper’s use of mid-range theory from the discipline of Some tentative managerial implications information economics, future research should identify and A signaling and screening perspective on the coordination of integrate other seminal economic theories at this level of value formation through resource integration has implications abstraction. In particular, the heterodox Austrian school for managers, customers, and stakeholders in commercial, of economics, which explores the production and use of private, or public service exchanges, especially in traditional resources, subjective use-value, the market, spontaneous order service industries. Service firms – which in our view means all and complexity, represents an undiscovered early framework firms – and individual service actors can strategically coordinate for the value creation narrative and axioms now known as the service exchanges by using signaling and screening for value S-D logic. This invites future theoretical reconciliation and creation. This may not always work in practice, leading to integration around issues like emergence, supported by insights unintended consequences and even value co-destruction, but from complexity economics and agent-based modeling of value learning from such situations may prove useful for managing formation. future service exchanges. 24 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 Chandler, J.D. and Vargo, S.L. (2011), “Contextualization By understanding service exchanges as activities and interactions that emit or capture signals, service actors are and value-in-context: how context frames exchange”, reminded that their own actions and those of others have Marketing Theory, Vol. 11 No. 1, pp. 35-49. consequences, intended or otherwise. This is especially Connelly, B.L., Certo, S.T., Ireland, R.D. and Reutzel, C.R. (2011), “Signaling theory: a review and assessment”, Journal important at a time when the growth of ecosystem business of Management, Vol. 37 No. 1, pp. 39-67. strategy is attracting increased public criticism and service Echeverri, P. and Skålén, P. (2011), “Co-creation and co- complaints on social media. Early recognition of strategic destruction: a practice-theory based study of interactive alignment and complementarity will enable service firms to value formation”, Marketing Theory, Vol. 11 No. 3, target and engage more effectively with relevant actors. pp. 351-373. By zooming out and understanding the role of signaling and Echeverri, P. and Skålén, P. (2021), “Value co-destruction: screening dialogue in resource matching, service firms can shape review and conceptualization of interactive value formation”, relationships as one-stop or recurring exchanges. This dialogue Marketing Theory, Vol. 21 No. 2, pp. 227-249. is also a powerful strategic tool for driving service growth by Edvardsson, B., Tronvoll, B. and Gruber, T. (2011), extending collaborative networks and enhancing mutual “Expanding understanding of service exchange and value co- understanding; without it, the well-known startup motto “Fake creation: a social construction approach”, Journal of the it till you make it” becomes wholly irrelevant. Finally, the Academy of Marketing Science, Vol. 39 No. 2, pp. 327-339. signaling and screening dialogue serves as a long-term strategic Edvardsson, B., Kleinaltenkamp, M., Tronvoll, B., et al. tool for (de-)institutionalizing best practices and public policy. (2014), “Institutional logics matter when coordinating resource integration”, Marketing Theory, Vol. 14 No. 3, References pp. 291-309. Gambetta, D. and Bacharach, M. (2001), “Trust in signs”,in Akaka, M.A., Vargo, S.L. and Lusch, R.F. (2012), “An Cook, K. 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(2001), “Silver signals: twenty-five years of screening Koskela-Huotari, K., Edvardsson, B. and Tronvoll, B. (2018), and signaling”, Journal of Economic Literature,Vol. 39 No. 2, “Emergence of novel resources in service ecosystems”,in pp. 432-478. Vargo, S.L. and Lusch, R.F. (Eds), The SAGE Handbook of Siltaloppi, J., Koskela-Huotari, K. and Vargo, S.L. (2016), “Institutional complexity as a driver for innovation in service Service-Dominant Logic, SAGE Publications, Thousand ecosystems”, Service Science, Vol. 8 No. 3, pp. 333-343. Oaks, London, pp. 372-387. Spence, M.A. (1973), “Job market signaling”, The Quarterly Peters, L.D., Löbler, H., Brodie, R.J., Breidbach, C.F., Journal of Economics, Vol. 87 No. 3, pp. 355-374. Hollebeek, L.D., Smith, S.D., Sörhammar, D. and Varey, Spence, M.A. (1974), Market Signaling: Informational Transfer R.J. (2014), “Theorizing about resource integration through in Hiring and Related Screening Processes, Harvard Univ Press, service-dominant logic”, Marketing Theory,Vol. 14 No. 3, Cambridge, MA. pp. 249-268. Stiglitz, J.E. (1975), “The theory of ’screening,’ education, and Vargo, S.L. and Lusch, R.F. (2008), “Service-dominant logic: the distribution of income”, American Economic Review, continuing the evolution”, Journal of the Academy of Vol. 65 No. 3, pp. 283-300. Marketing Science, Vol. 36 No. 1, pp. 1-10. Tadajewski, M. and Jones, D.G.B. (2021), “From goods- dominant logic to service-dominant logic? Service, service Corresponding author capitalism and service socialism”, Marketing Theory, Vol. 21 Sebastian Dehling can be contacted at: sebastian.dehling@ No. 1, pp. 113-134. kau.se For instructions on how to order reprints of this article, please visit our website: www.emeraldgrouppublishing.com/licensing/reprints.htm Or contact us for further details: permissions@emeraldinsight.com http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Services Marketing Emerald Publishing

How do actors coordinate for value creation? A signaling and screening perspective on resource integration

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Emerald Publishing
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© Sebastian Dehling, Bo Edvardsson and Bård Tronvoll.
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0887-6045
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0887-6045
DOI
10.1108/jsm-02-2020-0068
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Abstract

Purpose – Although service research typically asserts that institutions coordinate actors’ value creation processes, institutions and resources are not necessarily transparent, aligned, or pre-existing. This paper aims to develop a more granular perspective on how actors coordinate for value. Design/methodology/approach – Drawing on the established concepts of signaling and screening theory, this paper adopts a service marketing perspective to explore how independent heterogeneous actors coordinate for value creation at the individual level. Illustrative cases of corporate startup collaborations are presented in support of the proposed conceptual framework. Findings – Actors share and acquire information through signaling and screening activities in a coordinative dialogue with other actors. These resource integration activities (for resource creation and matching) affect actors’ valuations and future actions. Originality/value – The one-sided explanations of coordination in the existing literature reflect the dominance of the institutional theory. By contrast, the proposed agency-oriented perspective based on the integration of signaling and screening functions offers a more granular conceptualization of the resource integration process. As well as capturing how actors use coordinating dialogue to match resources and institutions, this account also shows that matching is a core element of resource integration rather than an antecedent. The findings indicate paths for future research that focus on the actor. Keywords Resource integration, Coordination, Signaling, Screening, Matching, Resource asymmetry, Value creation Paper type Conceptual paper access to resources like competencies, relationships, Introduction institutions, past experience or information about one another According to the service marketing literature, the joint activities is generally unequal. This complex condition of resource or interactions that emerge during any service exchange asymmetry, which emerges in any existing or potential exchange represent a source of value for the actors involved (Vargo and relationship, leads actors to intentionally or unintentionally Lusch, 2017). This perspective conceptualizes interactions as a misuse, misalign or fail to use available resources (Cabiddu process of integrating resources, embedded within the broader et al.,2019; Laud et al.,2019; Plé and Caceres, 2010; Prior and domain of interactive value formation (Caridà et al., 2019; Marcos-Cuevas, 2016). For that reason, there is a need for an Echeverri and Skålén, 2021). Existing research characterizes institutions as rules of the game that enable or constrain actors’ resource integration activities and so influence how actors co- © Sebastian Dehling, Bo Edvardsson and Bård Tronvoll. Published by create value (Vargo and Lusch, 2016). However, institutions Emerald Publishing Limited. This article is published under the Creative are not deterministic; nor are they necessarily transparent, fully Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, shared, or pre-existing (Karpen and Kleinaltenkamp, 2018; distribute, translate and create derivative works of this article (for both Lusch and Watts, 2018; Vargo and Lusch, 2016), and actors’ commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode The current issue and full text archive of this journal is available on Emerald Received 22 February 2020 Insight at: https://www.emerald.com/insight/0887-6045.htm Revised 13 September 2020 3 March 2021 1 July 2021 8 October 2021 Journal of Services Marketing 8 December 2021 36/9 (2022) 18–26 16 February 2022 Emerald Publishing Limited [ISSN 0887-6045] [DOI 10.1108/JSM-02-2020-0068] Accepted 17 February 2022 18 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 actor-centric explanation of how actors coordinate to facilitate interactive value formation processes and exchange services value co-creation rather than value co-destruction within the through resource integration (Caridà et al., 2019; Vargo and process of interactive value formation (Echeverri and Skålén, Lusch, 2016). However, while the existing literature recognizes 2021; Edvardsson et al.,2014; Karpen and Kleinaltenkamp, the asymmetric nature of service exchange between 2018). In the absence of a more granular view of resource heterogeneous actors (Edvardsson et al.,2011), it fails to take integration as an embedded core process of interactive value account of how the coordination of existing institutional arrangements in complex or problematic situations or the formation, the current literature fails to explain how actors availability of complementary resources is at best minimal and coordinate for value creation. usually temporary (Tadajewski and Jones, 2021; Vargo and The goal of resource integration is to create and match Lusch, 2017). resources (actors, institutions, processes and practices) for To address this gap, we look beyond a simple view of optimal co-creation of value (Gummesson and Mele, 2010). resource asymmetry as a matter of differential quantitative To facilitate such outcomes, actors must manage dependencies endowment (e.g. more financial resources) and instead define it between activities and resources (actors, institutions) through as a lack of equivalence between actors’ access, interpretation/ information sharing. Building on this idea, the present paper valuation and application of resources. This complex condition uses the well-established concepts of signaling and screening and associated dependencies among heterogeneous actors is (e.g. in information economics) to explain actors’ coordinative seen to emerge before, during and after a cycle of interaction behaviors in addressing aspects of resource asymmetry such as and valuation (i.e. resource integration) As in Akaka, Vargo information asymmetry (Hult, 2011). Signaling refers to and Lusch’s (2012) discussion of resource adoption, resource intentional actions (sometimes with unintended consequences) access, valuation and use are understood here as ongoing to disclose qualities (e.g. competencies) or intentions (e.g. processes of interactive value formation. As indicated earlier, preference for rule-following) that may not be recognizable, coordinating for value creation is part of the wider domain of aligned or realized without some degree of effort (Connelly interactive value formation, and possible outcomes include et al., 2011; Spence, 1974). Screening, on the other hand, refers value co-creation and value co-destruction (Echeverri and to intentional actions to identify and acquire resources such as Skålén, 2021). Here, coordination refers to the (inter-)actions information (Bergh et al., 2020; Spence, 1974). that contribute to the achievement of intended value outcomes In demonstrating the relevance of an actor-driven during interactive value formation. explanation of coordinating for value creation, the paper extends the conceptualization of resource integration to Principles of resource asymmetry and challenges for incorporate signaling and screening as naturally embedded resource integration functions and coordinative competences. We also show how In their elaboration of service-dominant (S-D) logic, Lusch and signaling and screening to address resource asymmetry by Vargo (2014) contend that anything that actors draw on or use creating and matching resources shapes actors’ valuations and through interaction can become a resource – something subsequent levels of resistance and interaction. To intended and expected to enable value creation. Understanding contextualize this extended framework, the paper describes resources as states of becoming rather than as fixed entities illustrative cases of collaborative innovation that required foregrounds the subjectivity of individual actors’ valuations and comprehensive coordinative dialogue to address resource lends relevance to the view that resources are integrated asymmetries among the involved actors. The paper responds to through interaction and become with other resources in a given calls for more research on asymmetric relationships context (Chandler and Vargo, 2011; Lusch and Vargo, 2014). (Tadajewski and Jones, 2021), coordination strategies (Karpen It follows that resources have potential value as context- and Kleinaltenkamp, 2018) and the nature of value creation in dependent abstractions that reflect individual actors’ sense of service marketing (Brodie et al.,2019; Pohlmann and “resourceness” or utility in context (Koskela-Huotari and Kaartemo, 2017; Wilden and Gudergan, 2017). Vargo, 2016; Lusch and Vargo, 2014). After describing the complex conditions governing how It becomes clear, then, that the unique subjective actors integrate resources, we identify the gaps in existing interpretation of constellations of resources or relations (actors, conceptualizations of resource integration. Signaling and institutions and other resources) in a particular time- and place- screening are introduced as a means of explaining the dependent situation contributes to resource asymmetry coordinative activities and interactions associated with resource between actors. Additionally, the empirical fact of non- integration. The paper advances a comprehensive conceptual transparent, misaligned or non-existing resources (such as framework supported by illustrative cases of innovation institutions or competencies) means that some effort may be collaboration and concludes by discussing the paper’smain required to recognize the potential resourceness within a contributions and limitations, along with directions for future particular context. Actors may also perform different roles in research. different situations (Chandler and Vargo, 2011), and public, private and market-facing sources of value may overlap, adding Coordinating for value creation to the complexity of deciding who should play which role The empirical fact of unequal distribution of resources (such as (Vargo and Lusch, 2011). As actors’ embeddedness in a knowledge, skills, land and capital) begets the economic truth particular exchange context also mediates resource access, that actors specialize and enter profitable exchange interpretation and integration (Laud et al.,2015), altered relationships to better themselves. From a service marketing access or availability affects subjective valuation and interaction perspective, this means that heterogeneous actors engage in as elements of the resource integration cycle and sources of 19 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 Figure 1 Principles of resource asymmetry Resource asymmetry Elements affecting and Interdependence of affected by resource elements asymmetry Valuation: Non-equivalent access Definition: Actors’ non-equivalent to resources affects actors’ access to and integration of subjective valuations and vice resources. versa. Classification: Complexity and Interaction: Non-equivalent access interdependence of resources to resources affects actors’ emerging before, during, and after interaction styles, skills, and roles any cycle of interaction and valuation in practice. (i.e., resource integration) among Outcomes: Expected or emergent, heterogeneous actors. intended or unintended, outcomes Consequences: Resource asymmetry contribute to actors’ non-equivalent affects actors’ valuation of resources access to resources. As newly and is affected by ongoing generated resources (i.e., interactions and outcomes that shape information), outcomes change or the state of those resources. maintain actors’ valuations and interactions. resource asymmetry, presenting challenges for coordination. A coordination, as it informs the subsequent valuations and third source of resource asymmetry is the outcomes generated by actions of other engaged actors. In any event, information is interactions and valuations, which in turn become new clearly central to resource integration as throughput, input and resources and influence resource asymmetry. Figure 1 provides output of the value processes that underpin service (Löbler, a conceptual overview of resource asymmetry as a permanently 2018; Lusch et al., 2010; Vargo and Lusch, 2004). changing condition of resource integration. We argue that effective coordination of value formation Given that actors make discriminatory valuations based on requires actors to fully understand the available resources and scarce resources and act as part of a service ecosystem, any the intentions of their collaborators. Vargo and Lusch’s (2014, interaction will generate some level of information or sensory 2017) parallel argument – that fully coordinated or managerial experience; even non-interaction provides information. actions are a special case of resource integration, and that the Resource integration, including mis-integration and non- general act of integrating resources is entrepreneurial – has not integration, generates new resources and influences resource been further addressed in the literature. The prevailing asymmetry by altering or maintaining relations between perspective contends that, as collective cultural beliefs, social resources as seen by individual actors. Given the axiomatic norms and practices, institutions provide a frame of reference condition of time passing, actors can evaluate qualitative and that constrains the range of actions available to different groups quantitative asymmetries by comparing perceived resource of actors (Edvardsson et al.,2014; Vargo and Lusch, 2016). relations before and after an interaction, confirming that Although a more recent account grounded in institutional work resource integration generates ongoing information that seems to acknowledge the agency element of coordination contributes to resource asymmetry, enabling or inhibiting (Koskela-Huotari et al., 2016); Vargo et al., 2015), it focuses on interactive value formation. the process of institutionalization rather than explaining how In similar vein, Peters (2016) advanced the idea of two paths self-interested actors coordinate for value creation. of resource integration that yield either summative outcomes Interestingly, recent conceptualizations of resource (e.g. exchange of information) or emergent outcomes (e.g. integration refer to a preliminary matching phase as a dialogue and learning). Complementing this line of argument, coordinating activity that ensures the efficient and effective Siltaloppi et al. (2016) proposed that novel resources are more integration of resources in pursuit of value (Caridà et al.,2019). likely to emerge from the interpretive flexibility afforded by Matching is understood as a dialogical process that aligns complex institutions that are overlapping, not fully transparent, resources, practices and actors (Caridà et al., 2019; misaligned or not yet existing, which we consider part of the Gummesson and Mele, 2010). While we acknowledge the more general concept of resource asymmetry. Regarding relevance of this process of alignment and resource fitting, it emergent outcomes, Hughes et al. (2018) linked resource remains unclear how matching occurs, but we accept that integration to learning, arguing that actors enhance their interactive value formation is a function of matching knowledge and skills through experience, which affects how competence (Echeverri and Skålén, 2021). they integrate resources in subsequent interactions. Equally, Caridà et al. (2019) argued that matching is simply a prelude any outcome may create resource deficits that lead to misuse of to the main process of resource integration: acting on resources, resources and ultimately to a lack of trust (Vafeas et al., 2016) followed by valuing as the interpretation of resources and or misaligned practices (Echeverri and Skålén, 2011). outcomes. In this three-phase account of resource integration, Differing interpretations or access to information can also Caridà et al. (2019) characterize matching as interaction lead to value co-destruction as an aspect of ineffective or inefficient value formation (Echeverri and Skålén, 2021; Plé through dialogue in practice, mediated by social context and coordinated by institutional arrangements. While we fully agree and Caceres, 2010). Regardless of whether the new perceived that matching is a dialogical process, we contend that a more state of relations between resources is an intended outcome or an unintended emergent consequence, this remains an issue of granular description of how matching actually occurs is needed, 20 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 in line with Gummesson and Mele (2010) and Alderson Both of these concepts address the effort or cost of (1957). generating, sharing or acquiring information (Gambetta and First, as matching by definition depends on interaction, it is Bacharach, 2001; Spence, 1973; Zahavi, 1975). Costly or not, conceptually inseparable from resourcing. Second, as matching every observable action or non-action embedded in a multi- involves identifying and aligning collaborating resource- actor social context – in this case, a service ecosystem – can be interpreted as a signal or remain a simple sign. In general, costly integrating actors, it is inseparable from valuing (the signals are not imitable without some effort and have more interpretation or judgment of resources). In general, valuing persuasive power in differentiating actors’ valuations of depends on actors’ competencies and past experiences, as well resources (Riley, 2001; Spence, 1974). Connelly et al. (2011) as institutions and other resources, which shows that argued that less trustworthy information about another and the conceptually valuing is based on resource integration as is effort required to distinguish between signal and noise makes matching. In short, Caridà et al.’s (2019) conceptual separation actors reluctant to interact (Perkins and Hendry, 2005). of resource integration into separate phases is not theoretically Screening and signaling are multifaceted competencies that consistent but is conflated with an empirical description. For actors develop over time for interpreting and using signals. In a example, in a coffee shop, matching occurs when a customer dialogue to facilitate value creation, one sequence of intentional looks at the blackboard and asks the barista for suggestions; actions may prove more useful, and knowledgeable and skilled resourcing is the act of ordering and paying; and valuing is the (i.e. competent) actors facilitate efficient and effective dialogue decision to buy and the customer’s judgment of the coffee’s to coordinate value formation in complex conditions of value as a subjective matter of taste. Against this, resource resource asymmetry. In such a dialogue, signaling and integration as a theoretical concept is defined and positioned screening enables competent actors to detect relevant signals here as the process underlying all three phases of interaction and to respond or countersignal, so providing feedback that and evaluation. confirms or improves the interpretation (Connelly et al., 2011) In summary, we conceive of resource asymmetry as a or confuses it (Bergh et al.,2019). In short, signaling and complex information problem that renders the existing screening shape coordinative dialogue through the feedback institutional view insufficient because it lacks an actor- or loop of observing and evaluating the results of one’s own and agency-driven element. To complement existing frameworks others’ actions and responding through further action or non- and to properly ground the concept of matching, it seems action. necessary to accommodate actors’ competencies and activities Through interpretation and comparison, actors try to match for coordinating value formation. Following suggestions for newly created or disclosed resources with existing resources conceptual development in marketing contexts (MacInnis, (e.g. knowledge, institutions) by determining whether certain 2011), we look beyond the institutional theory-driven service actions facilitate value, comply with institutions, explicate the marketing perspective to the concepts of signaling and implicit and enhance orientation and interpretation. Successful screening; in the substantive domain of service marketing matching drives the alignment or configuration of resources (Jaakkola, 2020), these concepts offer a means of explaining within an exchange context (Caridà et al.,2019; Gummesson individual actors’ responses to the challenges of coordination. and Mele, 2010; Nenonen and Storbacka, 2010). In furthering mutual expectations or understanding, this can be understood Signaling and screening as coordinative function and as a competence and therefore also as a resource. Similarly, competence actors learn which actions distract others from specific The present study is grounded in the concepts of signaling and resources or generate noise. These cheap actions screening, which have proved useful in a range of disciplines, accompanying the primary signal are used to disturb that signal including economics, biology and sociology. Hult (2011) (Branzei et al., 2004), making a resource visible only to a argued that these concepts can contribute to (service) particular group of actors that are believed to recognize it marketing theory because they help to explain how actors cope despite the accompanying noise. with information asymmetry in exchange relationships Interestingly, as a function of any deliberate action of this (Akerlof, 1970; Bergh et al.,2019; Connelly et al.,2011). The kind, signaling and screening can also be understood as a meta- concept of resource asymmetry as defined here is more competence across a range of scenarios and roles. While inclusive than information asymmetry. In our view, research has focused mainly on how signaling and screening information extends beyond market information to the issue of improve market exchanges by reducing information problems, subjective differences; as the core input and output of resource actors may also resort to opportunistic behavior to create value integration, information flows through all the processes of value for themselves while neglecting potential adverse effects for formation (Vargo and Lusch, 2004). other actors or the natural environment (Edvardsson et al., Spence (1973) defined signaling as one means of transferring 2011; Plé, 2016; Williamson, 1985). On a more positive note, information to other actors by disclosing (intentionally or signaling and screening inform trial-and-error learning about unintentionally) quality characteristics or action intentions that new resources, new resource combinations and their use in might not be identifiable in the absence of prior interaction interactive value formation. This is closer to what has been (Connelly et al.,2011). Screening refers to activities designed conceptualized as institutional work (Siltaloppi et al., 2016). to identify qualities and intentions that are not knowable Acknowledging the multifaceted subjectivity of resource without some effort (Spence, 1974; Stiglitz, 1975). To that asymmetry, our theoretical framework conceptualizes signaling end, actors emit a range of signals and allow others to self-select and screening as embedded functions of resource integration. If where and how to respond (Arrow, 1986). used intentionally and with due effort, this competence 21 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 contributes to coordination for value by facilitating resource Figure 3 Matching – function of signaling/screening and means for alignment and matching. Building on the theoretical coordination underpinnings above, we can now elaborate the extended framework before turning to some practical illustrations of its application in practice. Conceptual framework Extended conceptual framework In this first step of our extended conceptual framework (Figure 2), resource integration is envisaged as a cycle of valuation and interaction that affects and is affected by resource asymmetry – actors’ non-equivalent access to resources. By incorporating resource asymmetry in our account of resource integration, we aim to show how each cycle creates resources by emitting information that changes or maintains resource asymmetry for the actors involved. As well as limiting or enabling these actors’ valuations and integration of resources, resource asymmetry contributes to the evolutionary nature of resource integration. By constantly creating “new” resources (i.e. emitting information), resource integration is an inherently coordinative process – not just in the sense that the involved actors combine resources but because the ongoing emergence of information has consequences for future cycles of resource integration. This coordinative function persists even in the absence of intentional coordination practices. Unlike other conceptualizations, the first step of our framework excludes matching as an antecedent of the resource Actors signal through interactions linked to certain institutions integration cycle or as a sequence or separate element. In (i.e. meanings), and they screen by comparing, linking or Figure 3, the second step of the framework extends our account aligning emitted information with existing resources. In sharing of how actors coordinate for value outcomes. and acquiring resources (i.e. information) with or from other At the center of Figure 3, matching is the outcome of a goal- actors, this dialogue generates matches. The intentional use of oriented approach to coordinating for value based on the interactions to signal and screen generates matches and signaling and screening functions of resource integration. coordinates action in pursuit of desired value outcomes. Through ongoing interactions, actors can develop valuable Figure 2 Interdependence of resource asymmetry and resource resource combinations to produce complementary matches that integration more effectively facilitate positive value outcomes. The cycle of trial, error and learning continues until a match emerges. As signaling and screening are enacted in resource integration across multiple institutionalized practices, matching becomes a versatile competence and mediating resource. Existing institutional perspectives typically neglect the agentic element and lack the necessary granularity to explain how actors coordinate for value amid the uncertainty of resource asymmetry. Our framework bridges this gap by incorporating signaling and screening as strategic tools and by positioning coordination as a competence. To contextualize this extended framework, the illustrative cases in the next section draw on the authors’ professional experiences of resource asymmetry in dynamic innovation contexts. Coordinating for value in corporate-startup collaborations According to our theoretical framework, resource asymmetry is an aggregate condition of resource integration. Corporates and startups typically differ in their access to resources, and these differences clearly shape the relationship and interaction between such actors. For example, quantitative differences in financial resources prompt startups to seek corporate venture capital to finance growth or to pursue commercial 22 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 collaborations that facilitate market entry. Similarly, qualitative also signals their power to scale and to dominate their differences in credibility, trust or mutual understanding may competitors. affect relationships with other relevant actors. Because startups In practice, large incumbents are increasingly interested in often have business-to-consumer (B2C) access to user groups collaborating with startups as part of an open innovation strategy. To that end, corporates may adapt their habitual legal they identify with, they can develop innovative offerings to address personal pain points and evolving service demands. By provisions by moving toward a venture client agreement that contrast, large incumbents that provide services to the same allows startups to sell services and run paid pilot projects without the qualitative burden borne by established suppliers. group may encounter complaints because the relationship is taken for granted as the service become a commodity. This adaptation of legal agreements is a costly signal In any collaboration, actors starting from different positions demonstrating the corporate’s commitment and flexibility, are likely to perceive their use of resources as natural and to which would not otherwise be apparent. By contrast, as assume that this is obvious to others. For that reason, despite startups have no legitimate achievements to signal competence, some complementarity of resources, asymmetric collaborations the additional uncertainty associated with their innovative can prove difficult to coordinate in pursuing desired outcomes. technologies and business models makes it harder for While complementary knowledge underpins the shared value incumbents to see how value can be realized through of collaborating for innovation, differing market positions collaboration. For that reason, incumbents may decide to undermine shared understanding of each other’s pain points screen startups through low-cost, low-intensity pilot projects and how best to achieve their common goal. For instance, a before committing fully to a commercial agreement. Because of resource asymmetry, large incumbents may pay startup may need to make immediate short-term gains from collaboration because inefficient use of available resources for pilot projects as a signal of fairness, which would not could lead to financial difficulties or bankruptcy. By contrast, otherwise be observable given the corporation’s greater power and independence. Indeed, incumbents may maintain a an incumbent may view the startup as one resource among many and sees no need for urgent action. portfolio of engagement vehicles for startup collaborations, This lack of mutual understanding may fail them both. signaling different requirements and outcomes that range from Diverging perceptions and lack of knowledge of each other’s quarterly events and hackathons to incubation or acceleration programs, pilot projects, venture client agreements and qualities and intentions can create uncertainty that hinders initiation of collaboration, cuts it short or renders it ineffective corporate venture capital investments. By sending comparable or inefficient. This significant asymmetry of resources differs signals, startups can select an entry point to collaboration that sharply from a strategic alliance with peers or a supplier reflects their abilities and needs and potentially enhances innovation project. The interaction dynamic is also different resource integration and value formation. when collaborating with lead users as suppliers of ideas rather Screening and signaling behaviors change according to how than with commercial partners working toward strategic goals. potential collaborators approach and interpret each other. A startup may simply wish to use a big brand to enhance its Regardless of any partial complementarity, a significant disparity in access to resources is likely to increase uncertainty reputation while having other plans for commercial about means and ends. engagement. Equally, a corporate may be more interested in In these circumstances, signaling and screening serve as learning about new markets than investing resources that would strategic tools for increasing the potential of collaboration to enable the startup to become a competitor. The lifecycles and manifest and eventually facilitate value. Adopting a targeted primary contacts of both actors may also influence the signaling approach, a signaling and screening dialogue can enhance and screening dialogue. For example, startups run by industry- mutual understanding through intentional actions to learn savvy former consultants rather than young entrepreneurial about characteristics and needs. In practice, startups and large renegades signal and screen differently when interacting with market incumbents use signaling and screening to explore their large incumbents, and a large corporation with multiple shared resource asymmetry and how combining and integrating departments and sponsors may pursue a wide range of open resources as collaborators might facilitate value for both. The innovation strategies. feedback loop from these signaling and screening activities Signaling and screening can also reduce or overcome generates a minimum viable combination of resources that asymmetry through substitution or opportunistic exploitation of uncertainty. To reduce uncertainty in a given exchange supports initial cooperation and may or may not develop over time into sustained value creation. context, a startup may seek to initiate a collaboration with a This corporate-startup context is exemplary because the large corporation by offering a low-effort test of its resourceness success of any such collaboration can be explained to a (e.g. API access) to signal its quality. Similarly, a startup may considerable extent in terms of signaling and screening overcome uncertainty about its lack of previous achievement by activities. Through open innovation, large corporations can building its offering around a next-generation technology or build on startup success in new markets by screening those engage in further proof-of-concept testing to signal its potential markets to learn about value creation in a new context; for value formation and future collaborations. To secure more simultaneously, they signal their innovativeness to investors, funding from a corporate collaborator, a startup may use achieved through short-term collaboration. Similarly, startups signaling to increase resource asymmetry after screening the can screen acceptance of their new service by using corporate limits of this strategy with the focal partner. The startup may distribution channels to achieve scale and to gather feedback signal a need for further funding by inventing development beyond their own niche. This engagement with a major brand problems and delaying pilot projects. 23 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 On the other hand, startups may reverse to secure better The existing emphasis on institutions also neglects the outside investors. If an existing collaboration is proving Austrian school’s insights into the entrepreneur’s use of problematic, the larger organization may seek to maintain a judgment to identify new combinations of resources in the face positive narrative to attract other startups, and those positive of uncertainty. The lively discussion of uncertainty and value messages can be leveraged to increase resource asymmetry (i.e. creation in the entrepreneurship literature also seem worth innovation theater). Large organizations can also use signaling exploring; to the extent that effectuation and judgment inform to hinder the development of certain relationships by increasing the process of resource integration, the entrepreneurial perspective has much to offer. resource asymmetry – e.g. requiring signup to complex The present study also confirms the relevance of concepts agreements before engagement sends a signal to startups that like uncertainty and resource asymmetry for future research. lack the necessary competence or commitment. All of these The new institutional economics seems a valuable addition to instances confirm the role of signaling and screening as a mid-range marketing theory regarding the effects of uncertainty foundational strategic tool for coordinating value formation by on exchange relationships. Agency theory transaction cost matching resources and aligning mutual expectations. analysis also contribute to explanations of actor coordination, and property rights theory completes this set by lending further Conclusion depth to discussions of resource use and power. The present analysis offers a more granular account of how In general, the more granular approach to uncertainty in the actors coordinate for value. In particular, the proposed heterodox economics literature promises a better explanation framework highlights the relevance of an actor- and action- of associated behaviors than the bounded rationality of the S-D driven explanation of coordinating by articulating the role of logic. The existing value co-creation narrative also neglects the resource asymmetry in resource integration, which is neglected role of individual local and tacit knowledge and the explicit in the existing literature. On this view, resource integration is collective knowledge shared by multiple actors. Here, the issues grounded in a closed cycle of valuation and interaction that of power and access to knowledge are closely entangled with plays a coordinative role by continuously generating new perceived uncertainty and dominant institutions, indicating a resources (notably information). possible direction for exploring decisions and behaviors during To complement the existing institutional perspective on the resource integration. coordination of value formation, we adapt the concept of The concepts of signaling and screening offer a practical matching advanced by Caridà et al. (2019) and Gummesson starting point for empirical investigations of interactive value and Mele (2010) to extend existing conceptualizations of formation and coordination challenges in various contexts. resource integration. In particular, we conceptualize matching Although rooted in economics and biology, their profoundly as a coordinative activity that informs the signaling and social dimension may well illuminate the coordination of action screening dialogue. The framework describes how actors deal in a multi-actor environment and the occurrence of actions that with resource asymmetry, ranging from simple information seem non-rational. In the age of social media, where resource deficits to a complex variance in rule following, through deployment is increasingly complicated by short attention span intentional actions that create, share or acquire information and and fake news, it seems important to explore how dialogue explains how actors reduce, overcome or exploit resource through signaling and screening facilitates matching of actors asymmetry by matching resources to align and shape valuations, and resources. For example, to facilitate resource integration, levels of resistance and modes of interaction. This actor-centric actors may perform social roles at odds with their identity. account restores agency and intention to the coordination of Further research on signaling and screening may also value processes, which is lacking in the existing socio-structural enhance our understanding of value co-destruction, frameworks of S-D logic (Vargo and Lusch, 2016). asymmetric value outcomes and the decoupling of institutions and actions. Finally, an understanding of signaling and Future research – consolidation with seminal economic screening may help to explain the emergence, stability and theories decline of social institutions and service innovation. Some Following MacInnis (2011), our integrative conceptual combination of signaling and social capital theory may also approach invites new questions that will further advance yield insights into the motives of individual actors in existing understanding of resource integration and value coordinating resource integration. formation narratives in marketing contexts. Drawing on this paper’s use of mid-range theory from the discipline of Some tentative managerial implications information economics, future research should identify and A signaling and screening perspective on the coordination of integrate other seminal economic theories at this level of value formation through resource integration has implications abstraction. In particular, the heterodox Austrian school for managers, customers, and stakeholders in commercial, of economics, which explores the production and use of private, or public service exchanges, especially in traditional resources, subjective use-value, the market, spontaneous order service industries. Service firms – which in our view means all and complexity, represents an undiscovered early framework firms – and individual service actors can strategically coordinate for the value creation narrative and axioms now known as the service exchanges by using signaling and screening for value S-D logic. This invites future theoretical reconciliation and creation. This may not always work in practice, leading to integration around issues like emergence, supported by insights unintended consequences and even value co-destruction, but from complexity economics and agent-based modeling of value learning from such situations may prove useful for managing formation. future service exchanges. 24 Resource integration Journal of Services Marketing Sebastian Dehling, Bo Edvardsson and Bård Tronvoll Volume 36 · Number 9 · 2022 · 18–26 Chandler, J.D. and Vargo, S.L. (2011), “Contextualization By understanding service exchanges as activities and interactions that emit or capture signals, service actors are and value-in-context: how context frames exchange”, reminded that their own actions and those of others have Marketing Theory, Vol. 11 No. 1, pp. 35-49. consequences, intended or otherwise. This is especially Connelly, B.L., Certo, S.T., Ireland, R.D. and Reutzel, C.R. (2011), “Signaling theory: a review and assessment”, Journal important at a time when the growth of ecosystem business of Management, Vol. 37 No. 1, pp. 39-67. strategy is attracting increased public criticism and service Echeverri, P. and Skålén, P. (2011), “Co-creation and co- complaints on social media. Early recognition of strategic destruction: a practice-theory based study of interactive alignment and complementarity will enable service firms to value formation”, Marketing Theory, Vol. 11 No. 3, target and engage more effectively with relevant actors. pp. 351-373. By zooming out and understanding the role of signaling and Echeverri, P. and Skålén, P. (2021), “Value co-destruction: screening dialogue in resource matching, service firms can shape review and conceptualization of interactive value formation”, relationships as one-stop or recurring exchanges. This dialogue Marketing Theory, Vol. 21 No. 2, pp. 227-249. is also a powerful strategic tool for driving service growth by Edvardsson, B., Tronvoll, B. and Gruber, T. (2011), extending collaborative networks and enhancing mutual “Expanding understanding of service exchange and value co- understanding; without it, the well-known startup motto “Fake creation: a social construction approach”, Journal of the it till you make it” becomes wholly irrelevant. Finally, the Academy of Marketing Science, Vol. 39 No. 2, pp. 327-339. signaling and screening dialogue serves as a long-term strategic Edvardsson, B., Kleinaltenkamp, M., Tronvoll, B., et al. tool for (de-)institutionalizing best practices and public policy. (2014), “Institutional logics matter when coordinating resource integration”, Marketing Theory, Vol. 14 No. 3, References pp. 291-309. Gambetta, D. and Bacharach, M. (2001), “Trust in signs”,in Akaka, M.A., Vargo, S.L. and Lusch, R.F. (2012), “An Cook, K. 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(2014), “Theorizing about resource integration through in Hiring and Related Screening Processes, Harvard Univ Press, service-dominant logic”, Marketing Theory,Vol. 14 No. 3, Cambridge, MA. pp. 249-268. Stiglitz, J.E. (1975), “The theory of ’screening,’ education, and Vargo, S.L. and Lusch, R.F. (2008), “Service-dominant logic: the distribution of income”, American Economic Review, continuing the evolution”, Journal of the Academy of Vol. 65 No. 3, pp. 283-300. Marketing Science, Vol. 36 No. 1, pp. 1-10. Tadajewski, M. and Jones, D.G.B. (2021), “From goods- dominant logic to service-dominant logic? Service, service Corresponding author capitalism and service socialism”, Marketing Theory, Vol. 21 Sebastian Dehling can be contacted at: sebastian.dehling@ No. 1, pp. 113-134. kau.se For instructions on how to order reprints of this article, please visit our website: www.emeraldgrouppublishing.com/licensing/reprints.htm Or contact us for further details: permissions@emeraldinsight.com

Journal

Journal of Services MarketingEmerald Publishing

Published: Dec 19, 2022

Keywords: Resource integration; Coordination; Signaling; Screening; Matching; Resource asymmetry; Value creation

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